Income tax (expense) benefit

3 Months Ended

Mar. 31, 2017

Income tax (expense) benefit

Income tax (expense) benefit

8.Income tax (expense) benefit

In accordance with the FASB Accounting Standard Codification (ASC) Topic No. 270 “Interim Reporting” and ASC Topic No. 740 “Income Taxes” (Topic No. 740) at the end of each interim period, the Company is required to determine the best estimate of its annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. For the three months ended March 31, 2017, the Company recorded tax expense of $349,000 and for the three months ended March 31, 2016, the Company recorded a tax benefit of $17,000.

As of March 31, 2017 and December 31, 2016, the Company had a non-current deferred tax assets of $1.2 million and $1.4 million, respectively. The deferred tax asset relates to tax attributes of the Company’s U.S. subsidiary, Nabriva Therapeutics US, Inc. The Company maintains a valuation allowance against certain deferred tax assets as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

On the basis of this evaluation, as of March 31, 2017 and December 31, 2016, the Company has recorded a valuation allowance of $58,085 and $54,114, respectively, to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as the Company’s projections for growth.